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Posts: 474
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« Reply #1 on: December 19, 2019, 11:03:03 PM » |
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It depends whether you view loan interest as a business expense or as a cost of investing in a business. The argument goes something like this: if you borrowed a hundred grand and used it to buy a load of shares in, say, BP, you wouldn't expect to get tax relief on the interest, so why should you get tax relief on money you borrow to fund an investment property? It just distorts the market, in the same way that MIRAS used to do until it was abolished in the 1990s.
Of course, the comeback to that is to say you're not just buying an investment: you're putting in the hours, getting your hands dirty, running a business, and you should have tax relief on the cost of financing an asset used in that business, just as you'd have tax relief on the interest if you were a widget-maker and you took out a loan to buy a new widget-making machine.
You can try writing to your MP. You can make that argument. You can make that argument until you're Tory blue in the face. It won't make a fat lot of difference because, firstly, while a lot of MPs are landlords, they mostly fall into the "investment" rather than the "business" camp, and, secondly, the Government needs to get some cash from somewhere, and nobody's going to be too upset if they get it from those greedy fat-cat private landlords, are they?
Incidentally, if you're relying on not having to pay tax on loan interest, there's something wrong with your business model.
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